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If you invest in shares or mutual funds, accurately report income, gains, and dividends in your 2025 ITR to avoid penalties. Match broker statements and keep documents safe.
If you own more than one Demat account, it is essential to include details from all accounts when filing your tax return. (News18)
Individuals who invest in shares, mutual funds, and other market securities usually hold a Demat Account. While filing your Income Tax Return (ITR), it becomes crucial to follow specific guidelines if you are a Demat account holder.
Incorrect reporting of income, capital gains, or dividends may lead to the issuance of tax notices, penalties, or even a loss of tax benefits. Therefore, investors must exercise extra caution while filing their returns. Failing to report investment-related details properly can have serious consequences.
Ensure Accurate Reporting Of Capital Gains
If you have sold shares or mutual fund units during the financial year, it is essential to report any resulting profit or loss under the correct capital gains category; either short-term or long-term.
- For equity shares or equity mutual funds, if the holding period is less than 12 months, any profit is considered short-term capital gain, which is usually taxed at 20%.
- If the holding period is more than 12 months, it qualifies as a long-term capital gain. Gains exceeding Rs 1.25 lakh are typically taxed at 12.5%.
For other types of investments such as debt mutual funds, gold, or property, the 24-month holding rule applies to determine whether the gain is short-term or long-term.
Dividend Income Must Be Reported
It is mandatory to report any dividend income received from shares or mutual funds. This dividend is added to your total income and taxed as per the individual’s applicable tax slab.
Many taxpayers overlook this step, which could lead to discrepancies and scrutiny from tax authorities.
Report Capital Losses To Claim Future Benefits
If you have incurred any capital losses on your investments, it is equally important to disclose them in your ITR. By doing so, you can carry forward the losses for the next eight years and use them to set off against future capital gains.
This is a valuable way to reduce your future tax liability.
Cross-Verify Broker Statements With AIS
Before submitting your ITR, make sure to match the consolidated statement provided by your broker and your Annual Information Statement (AIS) with your own transaction records.
Discrepancies between these documents and your reported figures can trigger tax notices or inquiries.
Corporate Actions Can Affect Tax Calculation
Corporate actions such as bonus share issues, rights offerings, or stock splits may not have a direct tax implication at the time of occurrence. However, they do affect the cost of acquisition of your investments, which in turn impacts your capital gains calculations.
Incorrect computation in these cases can lead to increased tax liability.
TDS And Interest Deductions On Loans Against Securities
In some cases, Tax Deducted at Source (TDS) is applicable on securities and dividend income. Ensure that the TDS reflected in your AIS is properly claimed in your ITR.
Additionally, if you have taken a loan against securities or margin, be aware that interest deduction on such loans is permitted only under business income. Misreporting can lead to disallowance of deductions.
Report All Demat Accounts If Holding Multiple
If you own more than one Demat account, it is essential to include details from all accounts when filing your tax return. This is because the Income Tax Department receives information directly from brokers and depositories, and any mismatch could lead to complications.
Keep Investment-Related Documents Safely Stored
Maintain all relevant documents such as broker statements, contract notes, and dividend certificates for a minimum of six years. These records serve as crucial evidence in case of any discrepancies, tax notices, or AIS mismatches during scrutiny.
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